The Serbian National Assembly is in session.Source: B92
The Serbian National Assembly is in session.Source: B92
The Serbian National Assembly is in session.Source: B92
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The main topic of Assembly discussion is the Draft Law on Amendments to the Budget Law for 2021, i.e., the budget rebalancing. This is an urgent procedure, which envisages financial means for the implementation of the third financial assistance package to citizens and the economy. Another dozen of bills in the field of finance will be discussed in the next two 10 days.
The proposed budget rebalancing envisages 1,356.2 billion dinars of total revenues and incomes, 1,768.4 billion dinars of total expenditures and expenses. The GDP projection for this year has been kept at the level of 6 percent.
Presenting the details of the rebalancing proposal, the Minister of Finance said that the public debt at the general level will not exceed 60 percent at the end of the year, which he believes is a good result, given the actual pandemic and its effects worldwide.
"We will maintain the Maastricht level, we do not want the debt to exceed 60 percent," concluded Mali.
In his address, the minister also referred to the fact that Serbia managed to achieve one of the best results in Europe when it comes to GDP growth regardless of unfavorable conditions, to preserve employment and the economy, and to show that the state is there for the economy and its citizens. He also noted that inflation is stable and at low level with the stable exchange rates.
Earlier, in one of his speeches, Minister said that the budget rebalancing is done in front of the deputies in order to continue the battle against the coronavirus, raise the standard of citizens and complete capital projects.
"We have already had two packages of financial assistance, this one is worth 257 billion dinars, or some two billion euros. I think that through this package we will significantly help our economy and preserve its liquidity. So, we want to preserve production capacities, jobs, share optimism with our citizens ... The second reason for the rebalancing is the 'Serbia 2025' project, which involves 14 billion euros of investment in infrastructure. The third reason is the need for a further strong response to the pandemic - there are additional funds for vaccines, drugs , and everything needed. "
The Minister explained that in the sum of all three packages of financial assistance are worth about eight billion euros, or about 17.2 percent of GDP.
The minister said the state had set aside 3.5 billion euros to build a modern sewer network and wastewater treatment plant. It was mentioned that this capital investment project is being entered into with the Chinese company CRBC and that at this moment a complete construction of the sewerage network within 22 local self-government is planned, which would solve one of the very inconvenient problems of citizens in Serbia.
"The project will start this year in: Novi Sad, Ada, Malo Crnice, Knic, Lazarevac, Svrljig, Varvarin, Vlasotince, Vranje, Bor, Kladovo, Krupanj, Lajkovac, Mionica, Banja Vrujci, Obrenovac, Vranjska Banja, Svilajnac, Vladicin Han, Vrnjacka Banja, Aleksandrovac, Golubac and Cicevac ", Mr. Mali said.
The Minister said that these 22 local governments have achieved good results in the project's implementation. As for other local governments, the construction of the sewerage network will be possible only through projects carried out in cooperation with Chinese partners from CRBC.
"We have 65 local governments in total. The value of these investments with CRBC is 3.5 billion euros. Add a 200 million loan from the EU and 100 million euros from the EBRD," said Sinisa Mali.
When speaking about the fact that additional funds for ecology from the budget rebalancing have been increased three times - to 16 billion dinars, Mali said that 4 billion dinars are with the Ministry of Environmental Protection, and 12.1 billion with the Ministry of Construction and is intended for the construction of landfills, wastewater treatment plants, 169 treatment units, and a sewerage network.
"We do not just talk about ecology, these are concrete figures and projects," the Minister of Finance concluded.
Speaking about the budget rebalancing, consequently on the agenda as a result of good results in the economy, which will allocate more money for health, cultural institutions, youth, and sports, but also for growth of salaries, Sinisa Mali underlined that our country is one of the few in a world that has made the growth of living standards a priority.
"We were the only country in the world to have an increase in pensions and salaries. Our pensions increased by 5.9 percent, minimum wages by 6.6 percent, salaries in the public sector by 5 percent. We have confirmed that we are one of the few countries under pandemic to improve the standard of living ", said Sinisa Mali during his address to the deputies and underlined that if we all continue fighting together for greater economic growth, we will open space for further growth of pensions and salaries.
At the end of his address to the deputies, Sinisa Mali summarized all aspects of the budget rebalancing, with the conclusion that our country is heading in the right direction and announced a new increase in salaries.
"Our country, led by President Vucic, responds strongly to all the challenges during the coronavirus pandemic. We have been fighting for over a year to save our economy and the health of our fellow citizens. We have made great strides. In the process of procuring vaccines, opening new covid hospitals, equipping existing covid hospitals, on the other hand, we are fighting through the third package of financial assistance for our economy, through significant capital investments, we are fighting for 6 percent GDP growth by the end of the year, and we are fighting to be among the first, or the first, in terms of growth rate in Europe. The result will be increasing in salaries and pensions," concluded Sinisa Mali in his address to deputies who replied with the applause of support.
He reminded that salaries in the Serbian Army increased since March 1 this year, providing a salary increase of 4 percent to officers, non-commissioned officers by 8 percent, professional soldiers by 12 percent, for which the budget rebalancing envisaged some three billion dinars.
The Minister also emphasized significant allocations for ecology, with additional funds of 16 billion dinars provided.
"Thus, the total budget for ecology is over 24 billion dinars, or three times more than the initial budget of eight billion," said Mali, and singled out the two largest projects of the Ministry of Environmental Protection: construction of a sewerage network and wastewater treatment plants, with a total value of over 200 million euros and the construction of regional centers for waste management and related equipment, for which 100 million euros have been provided.
He also emphasized that the rebalancing provided additional 5.5 billion dinars for agriculture, and the total allocation of 58.3 billion dinars, which represents 5 percent of the national budget.
He also informed the deputies about other projects, planned by this budget rebalancing. Among other things, he stated that 100 million dinars were planned for the distribution of vouchers for subsidized vacations in Serbia, additional 300 million dinars were set aside to support the film industry and 350 million dinars for the prize fund of the popular “Uzmiračunipobedi” game.
He noted that the funds of the Ministry of Youth and Sports were increased by 1.9 billion dinars, and additional 90 million dinars were provided for the organization of more than 50 major international competitions and events.
The Minister of Finance invited the deputies to support this legal proposal and concluded that it is necessary to continue the fight for every new kilometer of highways and railways, for every new hospital, health center, school, factory, for new investors, because Serbia must not stop.
Deputy Dragan Markovic Palma said that he was closely monitoring the efforts made by the Ministry of Finance this year.
"Our government was among the first to help the economy and we have no layoffs. An employer who takes financial assistance cannot lay off workers, and that is a good catch," he said.
He also praised the vaccination process in our country.
"I will not say that we are a military force, but we are very well equipped, salaries have been increased, the morale of army employees and police officers is higher," Markovic said.
Mr. Risticevic explained: "Something also depends on us, engaged in agriculture. Through agriculture, numerous industries are raised. Farmers increase the number of jobs, they pay taxes, contribute to the budget and they deserve to receive more funds from the state as food producers."
Minister Mali reminded that the payment of one and a half minimum wage in three installments is planned for all economic entities who apply for this type of assistance package, for March, April and May, and that the payment has already begun.
He stated that sector support is planned for truckers who will receive 600 euros per bus. Also, city hotels will receive 350 euros per bed and 150 euros per room, and that assistance will be paid in the last week of April.
As explained by the Minister, financial assistance of two minimum wages is planned for caterers, travel agencies, licensed tourist guides and companions, as well as hotels, resorts, and car rental agencies, payable in July and August. Also, in that period, independent artists will receive two minimum wages.
Minister explained that a new bill is expected related to the second guarantee scheme, which will provide additional 500 million euros (60 billion dinars) for the most vulnerable sectors and companies.
He also referred to the government’s assistance to the citizens and reminded that the allocation of around 43.2 billion dinars is planned for the payment of 30 + 30 euros to all registered adult citizens of Serbia. Registration will be done through the Treasury portal through the call center, from April 28 to May 15.
He reminded that the plan includes additional 50 euros for retired citizens, i.e., a total of 110 euros of state assistance, for which 10 billion dinars were set aside. When it comes to the unemployed, the state will financially support them with a total of 120 euros.
"So, in addition to 60 euros for which all adult citizens of Serbia can apply, the unemployed will also receive an additional 60 euros in June," the minister said.
He emphasized that additional support will be provided to Serbs in Kosovo and Metohija, which will be paid in May. All Serbs, including children, will receive financial assistance of 100 euros, while the unemployed in Kosovo can expect an additional 100 euros (a total of 200 euros for the unemployed in Kosovo and Metohija), Mr. Mali explained.
The Minister said that one of the goals includes huge capital investments, which totals 430 billion dinars, or 7.2 percent of GDP.
"I will remind you that the share of GDP capital expenditures in 2010 was 3.2 percent, in 2011 that percentage was 3.1 percent and in 2013 only two percent. On the other hand, in 2019, the share of capital expenditures in relation to GDP was 4.9 percent, and now the allocations reach 7.2 percent of GDP, becoming the largest allocation for capital investments in recent history," said Mali, adding that the large capital investments will be extended with the 'Serbia 2025' program, which was set by the President of Serbia, Aleksandar Vucic as one of the priorities.
He mentioned that Serbia will build eight highways by the end of the year, which, as he knows, can’t be seen in Europe, probably not even in the world.
Mali stated that money has been set aside for the continuation of the construction of four highways - Preljina-Pozega, Moravian Corridor, Ruma-Sabac-Loznica, Sremska Raca-Kuzmin, but also for the construction kick-off of new ones such as the Danube Highway, Fruska Gora Corridor, Nis-Pločnik-Merdare.
In addition, he emphasizes that money has been set aside for the construction of a bypass route around Novi Sad, Gornji Milanovac and Loznica, as well as for the beginning of the construction of the subway in Belgrade.
He explained that the state allocates so much money for infrastructure because, as he says, it is the biggest driver for the growth of the economy.
He pointed out that the good quality of infrastructure is a precondition for the arrival of investors and reminded that Serbia attracted foreign direct investments in the gross amount of three billion euros last year.
Elaborating the budget rebalancing, Mali noted that the health system is important and necessary for the existence and survival of the state and society, which is why investments in health will not cease, both through the construction and renovation of hospitals and health centers, and through the procurement of medical equipment, materials, and drugs.
He explained that the total allocations for health in 2019 amounted to 289 billion, while presently they stand at 417.7 billion dinars, or billion euros more.
He also pointed out that 2.5 billion dinars were allocated for the construction of vaccine production facility, that the construction of a new Covid hospital in Novi Sad is planned, that the Clinical Hospital Center in Gracanica will be built, and that the reconstruction of the Clinical Center in Kosovska Mitrovica is planned. Among the future projects, among other things, the reconstruction of Clinical Centers in Belgrade, Novi Sad and Kragujevac were planned, modernization of Health Center in Borca, and the reconstruction of a number of general hospitals and health centers throughout Serbia.
"We are going to be one of the few countries in the world that will have its own vaccine production" said Mali.
He also emphasized, that additional budget has been set aside for the RFHI in order for the state to procure a sufficient number of vaccines and drugs in the fight against coronavirus.
For the first quarter of this year, the state planned a budget deficit of 80.9 billion dinars, which amounted to only 23.5 billion dinars, Finance Minister said.
The Minister pointed out that Serbia had a better collection of revenues in the first quarter by about 50 billion dinars.
"Despite the pandemic, and the huge economic crisis in the whole world, especially in Europe, despite the fact that the mass vaccination has not been completed and is not being done so quickly, our country has achieved exceptional results," Mali said in his address while explaining the Bill on Amendments to the Budget Law for 2021.
He also pointed out that the trends in the real sector are favorable and that the industrial production in the first two months set a stable year-on-year growth of 2.6 percent.
He also pointed out that production in the processing industry is at an all-time high.
"It is a consequence of the opening of a large number of factories in the previous period. It is a result that pushes our GDP forward and this result related to the budget deficit," said Mali.
In the first two months, there was also an increase in turnover in retail trade, as well as foreign trade.
Mali said that based on the results, expectations are that Serbia will have a fall in GDP of around 0.5 percent in the first quarter, while negative growth of 1.3 percent was planned.
"This gives us the right to expect that with such budget rebalancing, investment structure, and the third financial assistance package, we will certainly reach six percent of our GDP growth," said Mali, adding that Serbia still aims to be one of the best in Europe.
He pointed out that the result was not accidental, but that it was created thanks to aid packages implemented by the state last year.
He also referred to direct foreign investments, which remained high in 2020 and amounted to 2.9 billion euros net, and over billion euros gross.
"Montenegro, Bosnia and Herzegovina, Macedonia, and Albania have a total of 1.7 billion euros in direct foreign investments, and Serbia alone has almost three billion," he said.
He mentioned that Serbia is a good investment destination, which was recognized by the Moody's rating agency, which in March increased the rating of our country to "Ba2" from "Ba3", with stable improvement prospects. Recently, the rating agency Fitch also confirmed the credit rating of Serbia at the "BB +" level, with stable prospects for further increase, which is great news, because it is happening during the great world economic crisis.
As previously announced, apart from the budget rebalancing, other items on the agenda will include:
1. Draft Law on the Provisional Register of Adult Citizens of the Republic of Serbia to which financial assistance is paid to alleviate the consequences of the COVID-19 pandemic caused by the SARS-CoV-2 virus;
2. Draft Law on Amendments to the Law on Establishing a Guarantee Scheme as a Measure of Support to the Economy for Mitigating the Consequences of the SARS-CoV-2 COVID-19 Pandemic;
3. Bill on establishing a second guarantee scheme as a measure of additional support to the economy due to the extended negative impacts of the COVID-19 pandemic caused by the SARS-CoV-2 virus;
4. Draft Law on Amendments to the Law on Personal Income Tax;
5. Draft Law on Amendments to the Law on Contributions for Compulsory Social Insurance;
6. Draft law on electronic invoicing;
7. Draft Law on Amendments to the Law on Deadlines for Settlement of Monetary Obligations in Commercial Transactions;
8. Draft Law on Amendments to the Law on Insurance;
9. Draft law on the register of administrative procedures;
10. Bill on Ratification of the Agreement between the Government of the Republic of Serbia and the Government of the People's Republic of China on Mutual Recognition of the AEO Program of the Customs Administration of the Ministry of Finance of the Republic of Serbia and the Credit Management Program of the General Customs Administration of The people's Republic of China;
11. Bill on Ratification of the Agreement on Investment Promotion between the Government of the Republic of Serbia and the Government of the United States of America;
12. Draft Law on Ratification of Annex 1 to the Agreement between the Government of the Republic of Serbia and the Government of the Republic of France on Cooperation in the Field of Implementation of Priority Projects in the Republic of Serbia.